Pricing for Drilling Equipment & Services to Increase 4.3% Inflation Growth is Moderating…

Oil and gas operators worldwide anticipate pricing for drilling equipment and services to increase by 4.3% globally over the next twelve months. Regional variances are observed with 79% of offshore operators and 66% of international land operators anticipating prices to increase by approximately 9% while NAM land operators anticipate prices to decrease by 2.1%.

These regional variances are due to differences observed in the market with respect to drilling activity and the availability of qualified oilfield equipment and personnel coupled with capital discipline among operators and OFS suppliers.

Regionally, 1/3rd of NAM land operators anticipate pricing to decrease while 57% anticipate pricing to remain flat. It is important to keep in mind that while inflation growth is moderating, it is not 0%, and level pricing or a decrease in pricing will require operators and OFS suppliers in NAM land to work together to drive efficiencies and focus on operational excellence & execution, optimization, and safety to manage cost and drive cost inputs into the system lower.

Internationally and offshore, the dynamics are different. Operators internationally and offshore are increasing drilling activity levels in 2024 by 8.1% and 13.3% respectively as they work to restore lost production capacity following many years of underinvestment since 2015 and the need to meet growing long-term demand for oil & gas along with energy security concerns. In addition, the availability of qualified equipment and personnel remains tight coupled with lingering supply chain issues driving inflation costs higher internationally and offshore.

While price increases have “rolled over” as observed in the exhibit above, price increases will continue to prevail internationally and offshore over the next twelve months while NAM land pricing will face some downward pressure. The biggest opportunity, however, for NAM land operators continues to be with driving collaborative-based efficiencies with the OFS suppliers to continue to “accomplish more with less” – a trend that has been the key driver to NAM land success over the past several years.

Kimberlite will continue to track future pricing trends for oilfield equipment & services and report updates. Feel free to reach out to discuss.